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Scams R Us

Feds: Most Web Scams Originate in U.S.

By Mark Huffman
ConsumerAffairs.com

April 2, 2007

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It's called the "Nigerian 419" scam, but these days it's more likely to originate in New York than Lagos. The U.S. Secret Service reports Internet fraud increased in 2006, with the vast majority of traceable crime perpetrated within U.S. borders.

According to the report, Americans reported losing $198.4 million to Internet scammers last year, and that's just the victims who reported their losses to police. The report says many victims don't report incidents out of embarrassment, so the actual losses are likely much higher.

What's interesting is where the scammers are. In the past it was assumed that most operated in Africa, Eastern Europe and Canada -- outside the reach of U.S. law enforcement. But in 2006, the Secret Service says, of the criminals who could be traced, 61 percent were working within the United States. Only 6 percent were based in Nigeria.

The 419 scams reportedly originated in Nigeria in the early days of the Internet, and got their name from Section 419 of the Nigerian Penal Code, which deals with fraud.

U.S. law enforcement officials in the past have sometime appeared reluctant to investigate Internet scams, believing the trail would lead across a border. The new report may add pressure on U.S. officials to more vigorously pursue Internet scams.

It shows that victims of 419-type scams had an average loss of $5,100 last year, an increase of $100 per incident compared with 2005 levels and an increase of $2,100 per incident compared with 2004.

One reason for the decline in Nigerian based scams may be the actions of the Nigerian Government.

Under growing pressure, the government created the Economic and Financial Crimes Commission four years ago. That agency says it has launched a crackdown on Nigerian scammers and recovered more than $750 million for scam victims worldwide.

In the typical 419 scam, the victim receives an email, purportedly from a deposed government officials or dying billionaire, seeking held in transferring a huge sum of money to the United States. The scammer either steals the victim's bank account information, or manipulates them into sending several thousand dollars to help facilitate the transfer.

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